Japan mulls solar subsidy u-turn

The Japanese government has revealed plans to restore subsidies on solar panels after seeing several of the country's leading solar manufacturers suffer as a result of the move.

According to Reuters' reports, the Ministry of Economy, Trade and Industry, is drawing up plans for new residential and commercial subsidies with a view to submitting them as budget requests for next year.

"We don't want to depend on subsidies," Shoji Watanabe, who leads the ministry's new energy policy team, told the newswire. "We are hopeful that technology would eventually lower solar energy prices far enough that people will have an incentive to use it. Until then, subsidies or other state support, such as tax breaks, are necessary."

Japan remains the world's biggest supplier of solar cells but its leadership position has been challenged in recent years. Japanese manufacturers have not been helped by a drop off in domestic demand for solar panels following the cancellation of an initial subsidy scheme in March 2006.

Since then, Germany's Q-Cells AG has overtaken Japan's Sharp Corp as the biggest supplier of solar cells in the world, while China's Suntech Power Holdings Co Ltd has forced Kyocera Corp out of its third place position.

According to Reuters the planned restoration of the subsidies are could face opposition from the Finance Ministry, which had previously rejected calls for the subsidies to be reintroduced. However, the plans are likely to secure wider support following prime minister Yasuo Fukuda commitment earlier this month that Japan will cut carbon emissions by between 60 and 80 per cent by 2050.

Meanwhile, Tokyo's city assembly today voted in favour of plans to introduce a cap-and-trade scheme for 1,300 of the capital's biggest emitters. Under the plan, which is expected to be a forerunner for a nationwide scheme, offices, factories and other facilities responsible for about a fifth of the city's emissions will be subject to mandatory emission caps from 2010.